After an international treaty is negotiated, it then has to be ratifed by its participants. This can be modelled as a two stage extensive form game. In Stage 1, the players negotiate the treaty; in Stage 2, each country decides whether to ratify the treaty. For some countries, for example the United States, ratification can be difficult. The United States requires 67 out of 100 Senate votes in order to ratify a treaty.

The most important solution concept for an extensive form game is known as a subgame perfect equilibrium. Each stage of the game is treated as a subgame. The subgame perfect equilibirum is an equilibirum which is also a Nash equilibirum for each subgame.

The main technique for calculating subgame perfect equilibria is known as backwards induction. In this technique the subgame perfect equilibria for the “last” subgames are calculated first. Then taking these actions as given, we calculate the equilibria for preceeding subgames and so on.

By backwards induction, for negotiators in Stage 1 to play the subgame perfect equilibrium, they will take into account that a treaty will have to be sufficiently aligned with the domestic interests of the United States, in order for it to be ratified by the United States. The US Senate has two representatives from each state, so states with low populations (such as those in the midwest) are disproportionately represented. Coal is widely used in the midwest, and agriculture is an important industry. The US Senate is likely to want to see commitments from major developing countries. All of these issues are therefore likely to be important in international negotiations.

The US Senate will most probably consider the Waxman-Markey bill before the negotiations in Copenhagen commence. The Waxman-Markey bill will most likely require 60 out of 100 votes to avoid a filibuster. Issues that will affect the passage of the Waxman-Markey bill through the Senate will also be important for treaty ratification.

When the leader of the Liberal Party, Malcolm Turnbull, announced that the Liberals will go for stronger targets than Labor, he mentioned that 150 Mt of carbon dioxide could be sequestered through land use, including a technology known as biochar. How likely is it that we can do this? Does Malcolm Turnbull have the right policy for achieving this?

It is hard to tell whether Turnbull has the right policies because not much has been revealed about how this will be achieved. One issue with land use emissions and sequestration is that it is hard to measure. For example, to accurately measure carbon in soil, you need to dig a lot of holes. This makes it highly unlikely that soil carbon could credibly be included in an emissions trading scheme. Treating biosequestration as an offset is also problematic. For offsets to be credible, they need to be permanent, measurable, verifiable, and additional. Many emissions associated with land use are not accounted for under the Kyoto Protocol, but are nonetheless very real.

Another problem with the above approaches is that if large amounts of carbon are sequestered, and they contribute to a given total target, then unless the target can be strengthened, the credits could flood the market. This could lead to the emission reductions from fossil fuels that are necessary for decarbonisation not taking place.

We shall now examine how many emissions reductions are possible from different land use areas. These numbers are just estimates, but they allow us tio arrive at a ballpark figure.

Emissions in 2006 from land clearing were 63 Mt CO2-e (using Kyoto accounting).

Protection and regrowth of native forests

136 Mt plus

Mackey et al. (2008)1 consider a study area consisting of 14.5 million hectares of native forests in south-eastern Australia. They estimate that it is possible to sequester 7.5 Gt CO2-e in these forests if logging is halted. This is converted into 136 Mt CO2-e per year for 100 years using an equivalence factor derived by Costa and Wilson (2000)2. Scope for considerable more storage with all native forests protected.

Rangelands sequestration

250 Mt

Garnaut (2008)3 has an estimate of 250 Mt CO2-e per year for several decades, for “comprehensive restoration of degraded, low-value grazing country in arid Australia”. Garnaut also includes an estimate of a sequestration potential of 286 Mt CO2-e per year in soil for 20-50 years for changed practices to rehabilitate previously degraded rangelands.

Soil carbon – cropped land

68 Mt

Garnaut (2008).

Environmental mixed species plantings

44 – 143 Mt

Polglase et al. (2008)4 presents three scenarios, each of which has a net annual equivalent return of over $150 per hectare per yearfor a carbon price of $20 per tonne CO2-e:

The carbon dioxide that plays a role in anthropogenic global warming is either from sediments including fossil fuels and cement production, or from soils and biomass. This relates to the well known carbon cycle. The carbon in soils and biomass can be transferred to the atmosphere via phenomena like fire and drought, while fossil fuels in the ground generally stay there (except for human activity and some volcanos). A planet with more carbon in soils and biomass and less in sediments is therefore for better or for worse different to a planet with more carbon in sediments and less in soils and biomass.

This suggests that the externality of greenhouse pollution from burning fossil fuels is qualitatively slightly different to the externality of greenhouse pollution from land clearing. Another issue is there is often much more uncertainty with measuring emissions from land clearing and deforestation, or CO2 sequestered by planting trees or reducing overgrazing. Other greenhouse gases also play a role – there are also issues with uncertainty when estimating methane emissions from cattle.

Reforestation and avoided deforestation can have huge cobenefits in terms of reducing habitat destruction which is an important driver of extinction. Unfortunately it is harder to measure emissions from activities with strong cobenefits such as biodiversity plantings or avoided deforestation than it is measure emissions from activities with less cobenefits, such as monoculture tree plantations.

Hansen’s recent paper suggests that when albedo and carbon cycle feedbacks are taken into account then climate sensitivity rises to around 6 degrees for a doubling of CO2. Hansen then suggests that “If humanity wishes to preserve a planet similar to that on which civilization developed and to which life on Earth is adapted, paleoclimate evidence and ongoing climate change suggest that CO2 will need to be reduced from its current 385 ppm to at most 350 ppm. … An initial 350 ppm CO2 target may be achievable by phasing out coal use except where CO2 is captured and adopting agricultural and forestry practices that sequester carbon.” It is therefore important that we address both parts of the carbon cycle.

In an emissions trading market credibility is vital, uncertainty in measurement could undermine that. In a submission to the Garnaut review, I argued that some money raised from auctioning permits could be spent on activities such as biodiversity plantings until land use could be included. But perhaps these issues with uncertainty will always be significant. Maybe we need to create a parallel market in emissions related to agriculture and forestry. This could either be price based or quantity based. Perhaps uncertainty issues would mean a price (tax) based approach would be better, with activities that sequester carbon having a negative tax.

While it is relatively easy to measure the carbon sequestered from something like a monoculture tree plantation, it is more difficult to measure the carbon sequestered from restoring an ecosystem, or at least to have the carbon sequestered accredited. Reforestation and avoided deforestation can have huge cobenefits in terms of reducing habitat destruction which is an important driver of extinction. We need to learn as fast as possible how much carbon is sequestered through activities such biodiversity plantings and reducing grazing from cattle.

There is also the issue of emissions from logging and burning old growth native forests. At present only land that is converted from a ‘kyoto forest’ to land which is not a ‘kyoto forest’ or vice versa is included, so if you log an old growth forest, which stores huge amounts of carbon in both its soil and biomass, and then burn it, then because a forest will grow back, the emissions from logging and burning are not included in our greenhouse gas accounts. We need to learn as quickly as possible how to measure the GHG emissions from all kinds of emissions, including forest degradation and grazeland degradation.

Forest degradation and rangeland degradation do not get mentioned in the Green Paper, but it does suggest that carbon sequestered in forest products should be included in an international climate change framework. This is a similar approach to Australia’s reporting to the UNFCCC (which is slightly different to Kyoto accounting), where carbon sequestered in wood products is reported but emissions from forest degradation and rangeland degradation appears not to be. The could be construed as a way that Australia is gaming international climate negotiations. Or it could be a result of the government being influenced by rent seeking from native forest logging industries. Ironically, if forest degradation and rangeland degradation were included, it would probably be much easier for Australia to reduce its emissions.

We also need to learn as quickly as possible how much emissions are sequestered through sustainable land use practices that sequester carbon. We should also consider the possibility that there will always be significant uncertainties about how much will be sequestered. The best way to learn is by doing, so the question becomes how do we fund a whole lot of different environmentally appropriate activities that sequester carbon that we can learn from?